Get real: asset managers ditch swaps for loans

With swaps markets becoming less liquid and more expensive, especially for longer-dated trades, some pension funds are winding back the clock and sourcing long-dated, real assets to hedge their liabilities. But the strategy carries its own risks, reports Tom Osborn

Sumit Mehta, investments manager, Legal & General

Interest rate swaps are losing their appeal. Faced with new clearing and bilateral margining rules – and the prospect of huge cash calls during times of stress – asset managers with long-dated liabilities to hedge are increasingly turning to real assets instead.

Or, to put it another way, pension funds and insurers are replacing banks as lenders, particularly in long-term, index-linked loans to infrastructure projects, social housing partnerships and the like, where the associated regulatory

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here